GTT will pay $144.8M in cash plus $7.5M in stock, making this their biggest deal to date. MegaPath's managed services business did about $125M in revenue and EBITDA of about $20M in 2014. That's a multiple of about 7.2xEBITDA before synergies, which seems reasonable for this sort of business.

The size of the deal gets GTT significantly closer to their goal of $400M in revenue and $100M in EBITDA. In fact, if my math is right, following this deal their annualized revenues should be near $375M, with EBITDA in the $60M range before synergies. One more deal and some integration and they'll likely be there.

The fit with GTT's global IP/Ethernet backbone and cloud networking focus seems quite good, adding both some revenue scale to put on that backbone and some new talent on the security side of things to help fill out the portfolio. But the integration of this plus UNSi will probably keep them busy for a few quarters at least.

MegaPath had just sold its wholesale business to Global Capacity a few months prior, and this deal will leave it presumably with the cloud communications and SMB connectivity business. Now that the second shoe has fallen, I'd have to say it seems likely that the rest of MegaPath will have a new home soon as well, as their private equity backers seem to be cashing out. The last piece sounds like something Birch might be interested in, or perhaps even someone like ShoreTel or Mitel.

The deal is expected to close around April 1, 2015. GTT has tapped KeyBank Capital Markets and Webster Bank to help with the debt financing.